FTSE100, who's getting demoted?

It's getting around to that time again when the FTSE100 and 250 play relegation and promotion.

Companies that look like dropping to the FTSE 250 include public sector outsourcer Serco, oil services company Wood Group and struggling miner ENRC. Of these, Wood Group is a little surprising as it wasn't that long ago that they were promoted from the 250. Mind you, the share price has been under pressure recently as results have failed to impress.

Going up from the FTSE250 will be Sports Direct International, a UK High Street retailing success during what has been a difficult time, now valued at a touch over £4 billion. They are expected to be joined by packaging company Mondi and a former Greece listed company Coca Cola Hellenic.

Valued at around a £billion, Partnership Assurance is tipped to join the FTSE250.

One AIM company that is hoping to join the FTSE250 this year is Quindell Portfolio (see - Quindell Portfolio, incredibly cheap or crash and burn), the share price of which has recovered from around 5p to currently around 17p after undergoing a short sell attack earlier this year. Doubt they are going to make it this time though, although their ambition is to be FTSE100 eventually.

Quindell Portfolio - Incredibly cheap or crash and burn - Part 2.

Quindell Portfolio is one of the smaller AIM companies that I have been following recently. On paper it seems a remarkable story and looks like one of those penny share tiddlers that many investors dream about. The type of share that can be had for a few pence, but looks to have the potential to go much higher, a ten bagger or much more.

For some investors it is psychologically nice to own a lot of shares in a company and penny shares have always had their own unique attraction, although in reality they are often expensive if only because there are often hundreds of millions or billions of shares to be had. Penny share companies will often have a new issue to fund new ventures going forward or simply to raise more cash in order to survive. This will dilute any holding you may have, even if it does look good to hold a lot of shares you still don't have value and many small investors have been burned by smaller company penny shares.

Such companies tend to attract a strong vocal following and Quindell, certainly if bulletin boards are anything to go by, has its fair share of committed followers. It was recently in the news for all the wrong reasons as mentioned here which attracted the attention of short sellers, the share price being in free fall for several days. The debate on the BB's got very heated between defenders and attackers (bulletin boards on fire), the share price recovered slightly, but still lags, the trend looking horribly down.

Some have suggested that there are enough red flags about this company to make it one not to invest in. Others that the story is a good one with enough positives to suggest that the market is seriously undervaluing its worth. The market can be a strange place, because there certainly are plenty of companies doing far less than Quindell that have silly valuations applied to them. Nevertheless the market still doesn't quite believe the Quindell story, that what looks to good too be true may be exactly that.

Furthermore, the CEO of Quindell was previously the CEO of a similar company called the Innovation Group. That company grew by acquisition and its share price flew on the back of it. The rapid growth by acquisition at that time didn't stop the share price eventually collapsing though and Innovation is still a long way off its past share price highs and may never get back there. Thanks to the internet it is not that difficult to dig up some of the past history of Innovation and you do wonder if history is repeating itself.

Quindell Portfolio, Bulletin Boards on fire, shares continue to fall.

The sorry case of the falling share price of Quindell Portfolio continues to heat up debate on various investment bulletin boards around the web. I spent a little time yesterday reading the comments on a couple of boards, it was almost a running commentary as the share price continued to fall, ending the day a little under 6p, just about half its price of 3 days ago as bulls and bears of the stock slugged it out.

What came across however, was the almost despair of those that were invested in the stock or who had topped up as the price fell. They were catching the proverbial falling knife on a regular basis, only to see it go down further as more sellers came in.

A company RNS was issued on Thursday night regarding the 30%+ fall that happened on that day. it was meant to put a line under events - it didn't.

The Company is aware of recent press speculation regarding the equity swap and an active short position in relation to the Company's ordinary shares. In light of this, the Board wishes to clarify that further to its recently reported record results, the Company has a strong balance sheet and continues to trade profitably with significant traction in the insurance sector.

The Company knows of no valid reason for the recent share price decline. Furthermore, the equity swap asset, which has also been subject to speculation, accounts for a small part of the Group receivables and is not a material contract in relation to the size of the Group.  This was issued as part of the funding for the acquisition of Accident Advice Helpline, announced on 3 December 2012 and was deemed to be the least dilutive funding mechanism at this time. It is not currently being exercised, and the Company believes that the counterparty will continue to not make any material transactions in respect of the Company's ordinary shares unless the share price is at substantially higher levels.

http://www.digitallook.com/news/rns/20886456-2564291/QPP-Clarification_regarding_press_speculation_html

Quindell Portfolio - Incredibly cheap or crash and burn?

Yesterday AIM company Quindell Portfolio announced annual results that you might be forgiven for thinking would set the pulses racing, especially as, at least on paper and at first glance, the fundamentals and future prospects of the company seem to look great. 

Quindell Portfolio´s 2012 revenues and pre-tax profits were 10 times higher than the previous year as the company focused on earnings enhancing acquisitions.

The group, which provides expertise in software, consultancy and technology enabled outsourcing to insurance and telecommunications sectors, reported revenue of £137.6m, a 904% increase compared to £13.7m a year earlier.

Pre-tax profit rose 915% to £41.2m from £41.2m and earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 681% to £52.2m from £6.7m.

During the year, the company kept its emphasis on organic growth and profitable acquisitions in legal, health and claims.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=2564291&action=news&story_id=20879086

Prior to the announcement the share had been falling slightly, but upon the news it almost fell off a cliff, or at least a small one, from around 13p yesterday to a little under 11p today.

Quindell is one of those penny share type companies that seems to have a huge loyal following if comments on many BB's are anything to go by. However, even though its share price is in the penny share league, it does actually have a market cap of around £440 million, although that seems to fluctuate wildly with every 10% this way or that way move.

Reading on those BB's also suggested that bear raider Evil Knievil, Simon Cawkwell has also bet against it. If so, he has taken on the company itself which seems to be betting the other way. The Times reported that the company itself has £13.3 million in CFD long bets on its books, which some may think is not the way shareholders money should be used, while others might think it shows faith by the management in the company's future. For the moment at least, Quindell is probably losing big time on that bet (Note - read on a BB that this had now been closed although others question this).